Anti-money Laundering Law of the People’s Republic of China
The People’s Republic of China (PRC) has enacted strict anti-money laundering (AML) legislation to combat the proceeds of crime from entering the financial system of the country. This legislation has been in place since the early 2000s, when the PRC government began increasing its focus on combating financial crimes.
The main components of the AML legislation of the PRC are contained in the “Anti-Money Laundering Law of the People’s Republic of China”, which was enacted in 2006. In addition, the Standing Committee of the National Peoples Congress enacted regulations on the activities of anti-money laundering offices and on financial institutions’ compliance with the AML Law in 2017.
The AML Law of the PRC aims to prevent and combat money laundering activities and related crimes. The Law provides definitions of money laundering offences, stipulations of required traceable records, and adds requirements for financial institutions and other related organizations to identify and report suspicious activity.
The major provisions of the AML Law include regulations on the identification of customers in financial transactions, the reporting of suspicious activities, the keeping of records, and the monitoring of suspicious transactions by financial institutions.
The PRC’s AML Law defines a list of suspicious activities which must be reported by financial institutions to the relevant law enforcement body or Anti-Money Laundering Working Group: transactions of large sums of cash, unusual transactions, transactions involving shell companies, or transactions with locations or individuals outside of the PRC.
The Law also requires financial institutions to strengthen their internal control systems. Financial institutions must perform rigorous customer due diligence procedures to identify customers, register transactions, and keep records of transactions for a minimum of five years, which must include the customer’s name, address, ID number, the purpose and amount of the transaction, and any other information which might constitute a suspicious transaction.
The AML Law also stipulates the role of Anti-Money Laundering Offices within financial institutions. These Offices are responsible for monitoring suspicious transactions, establishing anti-money laundering control procedures, and reporting suspicious activity to the relevant law enforcement body or Anti-Money Laundering Working Group. Financial institutions must also comply with regulations to ensure that their senior management maintains oversight and control of the institution’s AML policies and procedures.
The AML Law has been effective in curbing money laundering activities in the PRC since its enactment in 2006, and has been regularly reviewed and amended in order to meet changing regulations and to ensure the effectiveness of the regulations. In recent years, the PRC’s legislature has made it compulsory for financial institutions to take steps to prevent and combat money laundering activities, and the penalties for money laundering offences have been increased.
In conclusion, the PRC has established regulations on anti-money laundering activities for financial institutions and continues to strengthen its AML legislation in order to combat money laundering activities and related financial crimes. By implementing strong AML legislation, the PRC has taken steps to protect the integrity of its financial system and to prevent criminal activities from affecting legitimate enterprises.
